Hi Guys,
was just curious to see if anyone uses or has used credit card funds to reduce interest by leaving it in their offset account. Not sure whether there are any benefits or if it's possible with all the fees involved with drawing down from a credit card.
would like to hear people's thoughts on this.
thanks
LOL i do this because i'll do anything to reach my financial goals early. If you have access to a efpos machine and the merchant will waive the merchant charges go right ahead. Just make sure you pay the credit card back before interest kicks in.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
I use CC to get frequent flyers and that's about it. Also make sure that I sell property with a company that gives a frequent flyer bonus ie LJ Hooker 20,000 points
Just be crystal clear on how the withdrawal from the credit card is treated. If it is a cash advance and interest charged from the moment you withdraw the funds, then it makes no sense to do this, since the interest rate on the credit card will be higher than the interest rate of the mortgage
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thank you for the reply guys. Very interesting.
The dark knight- how are you managing to do this without incurring fees onyour cc? Are u transferring the $$ to your offset using the eftpos machine?
Would love to know that this works lolYes this is very common and works well for those on one of the professional pacakge because there are no additional fees for the credit card or offset (some lenders).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Essentially my work has a efpos machine i use it as if i've purchased something say $1000 and my boss gives me the money i take it to the bank and put it into my offset account. Its a win for him as soon as the efpos machine gets settled at the end of the night the money is in his account it also has less chance of been stolen by other employees or if we were to be robbed. My CC has a 45 day non interest period i just pay it back on the 44th day and restart again.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
The Dark Knight wrote:Essentially my work has a efpos machine i use it as if i've purchased something say $1000 and my boss gives me the money i take it to the bank and put it into my offset account. Its a win for him as soon as the efpos machine gets settled at the end of the night the money is in his account it also has less chance of been stolen by other employees or if we were to be robbed. My CC has a 45 day non interest period i just pay it back on the 44th day and restart again.Will the boss wear the fees? If so and this is a PPOR non deductible loan then it could be a great way to save interest.
If an investment it could be tricky, but as long as you are not claiming interest on the cards maybe ok.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yeah i use it on my PPOR
he is fine with it as theft and robbery is high on our occupational operations. Every dollar counts especially your PPOR Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
How much does it work out to cost the merchant facility (eftpos machine) owner per annum for the merchant fees on that payment versus what you make on the offset ?
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
You have to be careful, about 3 years ago my wife used our personal cc (anz) on our merchant facility of our small business we had back then (suncorp) and because the merchant and the CC was an exact name match, we got a phone call from the bank within 24hrs (suncorp) telling me that legally they must report it to the ATO. Apparently it is a money laundering/washing technique. I got speaking to the lady and explained the mistake and she told me that within 6 months these types of transactions will be automatically flagged to the ATO without any warning or phone call.
Jimmy86 | Future Assist SMSF Specialists - Bris | Melb | Syd
http://www.futureassist.com.au/setupansmsf
Phone MeSelf-managed super specialist administrators and advisers
I do this but a few warnings and considerations i have had to learn the hard way. It sounds like a no brainer but just make sure you fully understand the T&C’s of the credit card you are using. I mistakenly did not pay back the required amount for a month and it took 2 months before they would reset the balance. The cost to me was about $120 in interest payments which chewed up months worth of savings i had achieved.
Also make sure you use a card with rewards. I myself use Qantas and the points can be used to buy woolworths vouchers which in turn is used for shopping. So basically I see the points as cash. Some cards such as the woolwroths one I have, gave me 16,000 points just for signing up but be careful these cards also carry a yearly fee. This particular card i believe is around $150 a year, so unless I am achieving that in rewards>cash then it is not worth it. FYI it takes around 7500 points for a $50 voucher. So to break even I need to achieve around 20,000 points for the year. This particular card is 1 point for $1 dollar on mastercard which is great. A lot of cards only do .5 for mastercard.
So that being said for me, I far exceed a spend of $20,000 each year on my card so I pay that fee off with the rewards i get and the extra points is icing on the cake.
Finally as everyone said just ensure your purchases are not cash advances. Things such as depositing into say a sportsbet account is a cash advance. Along with the $2.50 fee you also pay interest immediately so these should always be done from your savings account.
he is fine with it as theft and robbery is high on our occupational operations. Every dollar counts especially your PPOR 
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